Social Security decisions are the hardest to undo

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For many retirees, Social Security feels like income that you “turn on” when the time is right. But financial advisors say some claiming options could trap retirees with lower income, higher taxes or reduced survivor benefits. These decisions often seem minor in the moment yet can create lasting problems.

Read further: 5 signs you’re losing money every month – and how to spot the leaks

Financial experts reveal which Social Security decisions are the hardest to undo in retirement.

1. Claiming too early

Claiming Social Security early is one of the biggest regrets because people aren’t clear on how the system works and how long they’re likely to live, according to Frederick Said, managing partner of MoneyMattersUSA. “They treated Social Security as a bank account with their name on it, with balances they could withdraw. Inflation also has a bad effect on the reduced benefits paid over extended lifetimes,” he said.

Brady Lochte, a Trusted Financial Advisor and Founder Exxon Capital Managementsaid it’s common for retirees to misunderstand the math behind claiming early.

“Just because the money was available, claiming 62 is at the top of the list,” Lochte said. For someone with a full retirement age of 67, claiming early means accepting a permanent 30% deduction, potentially leaving $400,000 or more less over a 30-year retirement, he said. “The ‘I’ll invest the difference’ argument rarely works because most people spend it, not invest,” he said.

2. Longevity miscalculation

Many retirees claim to have made decisions based on unrealistic assumptions about health or lifespan, only to later discover that those assumptions were wrong.

“Health often improves after leaving a stressful job, leading retirees to have lower benefits for 30 (plus) years based on pessimistic assumptions,” Lochte said.

Saeed said longevity analysis should be the starting point of every claims negotiation. “From that set of assumptions, we can predict how long their income will last and where Social Security fits into their income plan.”

3. Survivor Benefit Decision

Claiming decisions affect not only the retiree, but also the surviving spouse. “When a higher earner claims early, they permanently reduce the survivor benefits their spouse will receive upon death,” Lochte said.

Saeed said a strategic claim requires only careful planning. “There needs to be a strategy for higher survivor benefits when a higher-income person takes Social Security,” he said. “If Social Security is thought of as an annuity with inflation adjustments, it is easier for this client to understand the survivor benefit.”

4. Tax and Medicare Interactions

Lochte said many retirees believe Social Security is tax-free or minimally taxed, only to be surprised to see how withdrawals and Medicare premiums interact once benefits begin. “Medicare IRMAA blindsides people when higher incomes drive Part B costs to $500 (or more) monthly instead of $185.”

Saeed said planning software can make these interactions much simpler. “Most planning software defaults to including 85% as taxable income, but this is wrong; it could be 50% or not at all,” he said. “Very few people have heard of IRMAA.”

5. Relying on informal advice

Relying on incomplete or incorrect guidance when making a claim is another unfixable mistake.

“The biggest mistake you can make when claiming benefits is not having an attorney for yourself and not getting a second opinion from a financial planner,” says CFP and financial advisor Ryan Monette. Sawant Wealth Management. “I have seen several examples in which a person simply accepted what a Social Security representative told them, only to later discover that the representative was wrong, costing the individual benefits.”

Monette said friends and acquaintances can also unwittingly steer retirees in the wrong direction. “Many people listen to their friends and acquaintances and believe what they heard is true or that they will get the same results,” he said.

Claiming Social Security should be part of a larger retirement strategy created well in advance of retirement.